MagicJack Rallies on Prospects Lower Costs to Boost Earnings

The Israeli company, whose founders invented the technology
used for making phone calls over the Internet, surged the most
since Oct. 19, increasing 9.6 percent to $20.07 at the close of
trading in New York.

MagicJack, based in Netanya, Israel, expects to spend less
on marketing this quarter as its new mobile telephone product
won’t begin production for two weeks, Chief Executive Officer
Daniel Borislow said by phone from West Palm Beach, Florida. The
company said earlier today in a statement that it raised its
2012 operating income forecast to $155 million, without
specifying a previous estimate.

“They’re saying operating income will be higher because
they’re waiting for the new products before they ramp up
marketing expenses,” Timothy Horan, an analyst at Oppenheimer &
Co. in New York who has the equivalent of a buy rating on the
shares, said by phone today. “These products will contribute
well to revenue and earnings over the next three years.”